The former chairman of the Atari video game division of Warner Communications Inc. and another top officer of the firm were charged with insider trading yesterday by the Securities and Exchange Commission.
The SEC charged that Raymond E. Kassar, who was ousted as Atari chairman last summer, and Dennis E. Groth, a senior vice president of Atari, illegally sold Warner securities based on information about the company's finances that had not been disclosed to the general public.
The complaint alleges that Kassar, while chairman and chief executive officer, sold Warner shares just before an announcement that Atari expected materially lower earnings.
The SEC said Kassar sold 5,000 shares of Warner for $52.625 a share on Dec. 8, 1982 at 11:41 a.m. Four minutes after noon, Warner announced that its 1982 results would be "substantially below expectations" due in part to disappointing Atari sales. The price of Warner shares began dropping immediately and fell to $36.25 per share on Dec. 13.
The SEC claims Kassar illegally acted on non-public information, knowing sales of video game cartridges has slowed significantly, the coin-operated arcade division has suffered a loss and internal forecasts predicted serious fourth quarter losses.
Kassar, who was forced to resign last summer and is now a consultant to Atari, issued a statement saying, "That sale was arranged to fund a year-end tax shelter. In retrospect, however, its timing was no doubt ill-advised and creates a clear appearance of impropriety. In that light, cooperation with the commission in the disposition of the matter seems to me a better course."
Kassar signed a consent agreement neither admitting nor denying the charges. He was ordered to give back $81,875--the amount he allegedly saved by selling the stock before the price fell.
Also cited was Groth, who was then executive vice president and chief financial officer of Atari. He allegedly sold 10,900 Warner warrants on Nov. 17, 5,000 shares of Warner common stock Nov. 19 and 6,376 shares of Warner common Dec. 1, 1982.
Groth did not consent to the SEC charges. He could not be reached for comment yesterday.